JOHANNESBURG – The Department of Justice and Constitutional Development (DoJ) on Monday announced that it is finalising a Magistrates’ Court Amendment Bill “in an attempt to curb the abuses of the debt recovery procedure system”.
The announcement comes in the wake of a recent High Court ruling that declared certain sections of the Magistrates’ Court Act, which deal with emoluments attachment orders (EAO), to be unconstitutional.
The ruling ordered that magistrates must give oversight to the issuing of EAOs, incorrectly termed garnishee orders, and that EAOs must be issued in the same jurisdiction as the debtor’s place of work or residence.
It appears that the Amendment Bill will support the judgement, as the DoJ has called on creditors to take it seriously and “ensure that judgements and EAOs are obtained with due regard to the sentiments expressed in the Stellenbosch matter and to have those which have not been legally obtained, rescinded”.
While it is not clear whether the judgement can be adopted prior to the Constitutional Court confirming it, it nonetheless “goes a long way to indicate sentiment as well as a push for procedural changes required at court”, said Clark Gardner, CEO of financial wellness firm, Summit.
Gardner said that Summit’s reading of the DoJ’s statement is that collectors should set aside all orders issued out of the incorrect jurisdiction.
The ‘Flemix respondents’, which include law firm Flemix & Associates and the 13 credit providers they facilitated EAOs on behalf of, have applied for leave to appeal the judgement and approached the Constitutional Court with a separate application. This could delay a confirmation of the judgement.
The DoJ has nonetheless urged employers to negotiate with creditors to withhold EAOs until their validity is confirmed. “They can also approach the clerks of the courts where the EAOs originated to ensure that judgment has been granted lawfully, check how much of a debtor’s salary is committed to EAOs and whether he or she can afford another deduction,” the DoJ said.
“This is a very powerful message reflecting that sentiment is now strongly against these abusive practices,” said Gardner.
The judgement referred to was handed down by Judge Siraj Desai and also declared EAOs pertaining to 15 individuals – mostly workers on wine farms in the Western Cape – to be of no force or effect.
The University of Stellenbosch’s Legal Aid Clinic (LAC) brought the application on behalf of these debtors, some of who are employed by businesswoman Wendy Appelbaum’s De Morgenzon wine estate. The LAC also brought the application to have certain sections of the MCA declared unconstitutional.
“I am thrilled that they are stepping up to the plate. It is important that this abusive industry is cleaned up so as to allow a cleaner industry to step into the breach,” said Appelbaum. “Legislation should become watertight and criminal convictions need to follow. There must be consequences for the fraudulent behaviour that has been allowed to thrive.”
Appelbaum called for interest rates to drop in order to make debt “affordable” and so increase the chances of repayment and bonded labour.
The Constitutional Court must now confirm the judgement and has powers to extend its reach.
The DoJ said the amendment bill will be available on its website soon for comment before being submitted to Parliament for consideration and enactment.
Moneyweb submitted questions to the DoJ last week Tuesday around the implications of the ruling.
Some commentators have made off-the-record remarks about the ruling being an indictment on the efficacy of magistrates’ courts. We await comment from the Department.